AFSB 152 Exam New Latest Version Best Studying Material
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CHAPTER 1 ------------ Correct Answer -----------
which one of these types of claims reserve is established by actuaries ------------ Correct Answer
----------- bulk reserves
which one of these is a reason why payment bond claims may be difficult to calculate ------------
Correct Answer ----------- payment bond claims involve multiple parties
an indemnity agreement allows a surety to adjust the rights among parties. which one of these
actions might a surety take to reduce the amount of the principal's and indemnitors liability
imposed by an indemnity agreement? ------------ Correct Answer ----------- deduct any money it
may owe to the principal or indemnitors, such as a return premium
which one of these statements is a principal's obligation in a bid bond that is not a manuscript bid
bond form? ------------ Correct Answer ----------- an obligation of the principal in a bid bond form
is that it must furnish performance and payment bonds with an acceptable surety
which one of these statements is correct about the penal sum of the bid ------------ Correct
Answer ----------- the penal sum of a bid bond is the maximum amount the surety's liability
which one of these is a defense for a surety to the obligees claim under a bid bond ------------
Correct Answer ----------- the principal discovers a mathematical error in the bid it has provided
to the obligee
what did contractors, laborers, and suppliers rely on to protect them from nonpayment prior to
the creation of labor and material payment bonds ------------ Correct Answer ----------- their
mechanic's lien rights
payment bonds are executed in the favor of the ------------ Correct Answer ----------- obligee
which one of these is an example of a defeasance bond ------------ Correct Answer ----------- a
miller act performance bond
which one of these is the key source of information available to the surety ------------ Correct
Answer ----------- the principal
which one of these is the focal point of the surety's inquiry ------------ Correct Answer -----------
determining the cash position of the principal's work-in-progress
which one of these is not a factor that determines the scope of information gathering in a claims
,context? ------------ Correct Answer ----------- the obligee's level of responsibility
which of these is the purpose of a cooperative underwriting arrangement ------------ Correct
Answer ----------- the indemnification of a unites dates entity by its foreign parent company
in which of these areas would a contractor be most likely to obtain funds through an advanced
payment bond? ------------ Correct Answer ----------- South America
which one of these has a limited appeal because of its legal complexities ------------ Correct
Answer ----------- dual obligee completion bond
which one of these guarantees completion of a project if the principal fails to perform, in
accordance with the plans and specifications, in the given time limit and free of liens ------------
Correct Answer ----------- lenders bond
which one of these usually obligate the surety to perform maintenance related to defective
construction for one year after completion ------------ Correct Answer ----------- subdivision bond
which of these is most likely to be used on a large private-joint venture project? ------------
Correct Answer ----------- construction management project contract
which of these is considered a high risk venture ------------ Correct Answer ----------- timber
contract bond
which one of these is the first area of concern for underwriting a demolition contract bond? ------
------ Correct Answer ----------- the complexity of the demolition project
which of these is not an example of a service contract? ------------ Correct Answer ----------- fuel
supply contract
which of the following should be continually monitored for individuals and companies applying
for surety bonds? ------------ Correct Answer ----------- character and pacity
which of these is a situation in which a bonding company uses a backlog in working capital
ratio? ------------ Correct Answer ----------- a bonding company uses a backlog to working capital
ration when it is considers extending a bonding credit to a contractor
which one of the these shareholders/owners equity ratios expressed as a percentage of backlog, is
preferred by a bonding company when considering the extension of bonding credit? ------------
Correct Answer ----------- a bonding company prefers a shareholders/owners equity ratio
expressed as a percentage of backlog of 10 percent
in addition to the requirements of the bonding company and the analysts judgment, which one of
the following is another element in the decision-making process regarding the scope of the trend
analysis and forecasting techniques that the analyst will use? ------------ Correct Answer ----------
- the amount of bonding capacity the contractor requires.
,which one of these is an example of an accounting consideration that affects working capital
over and above the net income (loss) results but does not affect shareholders/owners equity ------
------ Correct Answer ----------- depreciation
which one of the following is a reason many analysts supplement a financial statement analysis
form with notes regarding their observatons? ------------ Correct Answer ----------- The completed
form alone seldom provides a sufficient analytical summary.
which one of the following statements indicates when a clients lease agreements should be
reviewed by the analyst? ------------ Correct Answer ----------- When the asset values and
obligations are substantial.
The Key indicator of a contractor's success in generating income from its construction projects is
------------ Correct Answer ----------- gross profits
the statement of cashflows reveals the cash effect of several of the contractors activities. which
one of the following activities would not be found on the statement of cashflows? ------------
Correct Answer ----------- taxpaying
which one of the following is true regarding components of a contractors balance sheet? ----------
-- Correct Answer ----------- total liabilities + stockholders equity = total assets
in measuring a financial position at a point in time and financial performance over a period of
time, a financial statement is largely a ------------ Correct Answer ----------- quantitative
assessment
which of the following is true regarding retrospective adjustments to a contract status report ------
------ Correct Answer ----------- the retrospective adjustment recalculation is based on the
premise that the additional information is the most reliable
which or the following is true regarding an abbreviated backlog report ------------ Correct Answer
----------- an abbreviated backlog report is a practical solution in the day-today- handling of a
contractor's bonding needs
A technique to gain additional information to adjust bond premiums after overruns and
underruns have been reported is a ------------ Correct Answer ----------- status inquiry
the technique used to check progress and determine whether backlog amounts are within contract
guidelines is ------------ Correct Answer ----------- a abbreviated backlog report
when an analyst restates a contract status report and adjust the analysis based on information
received after the original preparation of the report, the analyst is using the technique of ----------
-- Correct Answer ----------- retrospective adjustments
Calculating the backlog on a revenue basis requires first calculating which of the following from
, information on a contract status report ------------ Correct Answer ----------- billing basis backlog
which one of the following is true when calculating profit margin using a contract status report --
---------- Correct Answer ----------- a profit margin can be calculated as the original gross profit
divided by the contract price
to achieve a more exact analysis, an underwriter may calculate backlog on which one of the
following bases? ------------ Correct Answer ----------- revenue bases
which one of the following is true regarding status reports? ------------ Correct Answer -----------
a short-form status report shows specific and limited data for a contract.
which of the following most accurately describes a contract status report ------------ Correct
Answer ----------- even though a contract status report reflects a dynamic situation, its figures are
reasonably dependable
which one of these is a disadvantage of the short-form report (basic report) ------------ Correct
Answer ----------- the bonding company is dependent on calculations made by bonding company
personnel
contract status reports ------------ Correct Answer ----------- contain backlog information that can
be important in financial results forecasting.
which of the following is correct regarding the cash method of construction contract accounting -
----------- Correct Answer ----------- the cash method may be a preferred method for income tax
reporting but not for financial reporting purposes
which one of the following may present a financial reporting problem with the simple accrual
method of construction accounting ------------ Correct Answer ----------- it includes a front-end
loaded bid
which one of the following is correct regarding accounting for purchase of construction
equipment? ------------ Correct Answer ----------- Construction equipment is recorded as capital
asset at the time of purchase
The primary consideration influencing most contractor's selection of tax-reporting method is -----
------- Correct Answer ----------- Deferral of payment of income taxes to the greatest extent
permitted.
An underwriter's direct verification of a contractor's financial data ------------ Correct Answer ----
------- is limited to verifying the accuracy of schedules the contractor provides.
Which one of the following provides information about a contractor's accounting policies? -------
----- Correct Answer ----------- Notes to financial statements
A procedure to express assurance that financial statements conform to generally accepted
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